Philippine Institute of Arbitrators

Involved in Arbitration / ADR?

We know the different processes.
We can help you dissect and analyze them,
refine and combine them, and create hybrid
procedures to make them suitable for
particular relationships, as well as to develop
strategies and point you to the right direction.

COMPREHENDING
ARBITRATIONS
by

MARIO E. VALDERRAMA LLB, FCIARb, FHKIArb, FPIArb

CIArb Approved Tutor
CIAC, PDRCI and WESM Accredited Arbitrator
Member (co-opted) of the Branch Main Committee of
The Chartered Institute of Arbitrators
East Asia Branch
Contact Details
Tel No 367 4001; Telefax 362 1867
Mobile 0917 4114 594
E-mail <marval.law@gmail.com>

CLEARING THE CONFUSION:

ARBITRATION AND STATUTE BASED
ARBITRATIONS

There are several processes

arbitration in the Philippines.

Classes:

called

a. Arbitration (traditional/agreement based)

b. Statute based arbitrations based on law

CLEARING THE CONFUSION

CONCEPT OF ARBITRATION (AGREEMENT

BASED)
Arbitration is a device whereby the settlement of
a question, which is of interest for two or more
persons, is entrusted to one or more other
persons the arbitrator or arbitrators- who
derive their powers from a private agreement,
not from the authorities of a State, and who are
to proceed and decide the case on the basis of
such an agreement Fouchard, Gaillard,
Goldman
on
International
Commercial
Arbitration para 7 citing several authors.

AGREEMENT BASED
ARBITRATION

Elements:
A consensual mode of dispute
resolution by a third party neutral chosen
by the parties leading to a final and
binding award. from Guillard.

It is not true arbitration if any of the

elements is not present.

AGREEMENT BASED
ARBITRATION
Classification
Ad

Hoc do it yourself arbitration

Institutional

administered by an arbitral
institution, usually under its own rules.

AGREEMENT BASED
ARBITRATION
Sub Classification: Institutional Arbitration
Fully

administered.
arbitrations
Partly

administered.

Example:

ICC

AGREEMENT BASED
ARBITRATION
Note: PDRCI Arbitration
Under PDRCI Rules, the counsel in charge of
the file is empowered to (a) intervene in an
arbitration in case of manifest violation of the
PDRCI Rules and (b) to assist the tribunal and
the parties to, among others, the procedure to
be followed; presenting arguments and
evidence; and making awards, but with the
caveat that there is a limit to assistance.

Agreement Based
Arbitration
Classification as to applicable law
Foreign jurisdictional seat is a country
other than the Philippines. Applicable law of
arbitration is the arbitration law of the seat.
If a foreign award were being enforced in
the
Philippines, the applicable law is the
New York Convention of 1958.
Note: Classification of relative application.

Agreement Based
Arbitration
Classification as to applicable law
Local - Philippines is the jurisdictional seat

Domestic without foreign element; defined in

the negative. Applicable law is R.A. 876 and
Civil Code Title XIV as amended/modified by
R.A. 9285.
International with foreign element. Governing
law is the UNCITRAL Model Law (1985) as
modified by R.A. 9285.

Note:

Classification of relative application.

Agreement Based Arbitration:

When Arbitration is International
(Model Law 1(3))

Re parties places of business;

Re agreed seat of arbitration in re places of
business;
Re place where a substantial part of the
obligations is to be performed; place with which
the subject matter of the dispute is most closely
connected in re places of business;
Re agreement that the subject matter of the
arbitration relates to more than one county.

CLEARING THE
CONFUSION:

STATUTE BASED ARBITRATIONS

Sub Classification

Optional - needs stipulation to arbitrate, e.g.

CIAC and voluntary labor arbitrations

Imposed does not require agreement to

arbitrate, e.g. consumer and compulsory labor
arbitrations

FOCUS OF DISCUSSION
Our focus is on agreement based
arbitration.
This is true arbitration, based on consent and
not on law. Consensual justice.
In arbitration the parties craft the procedure.
Those who do not know what to do have no
recourse except to rely on the arbitrator.

CLEARING THE CONFUSION:

AGREEMENT BASED ARBITRATION

Contractual; synonymous with the concept of party autonomy

in the resolution of disputes
Tribunal an instrumentality of the parties
Award is product of private dispute resolution processes,
hence the need for judicial recognition of confirmation
Principle of finality of awards is based on contract & core
component of the process
Validity issues: award treated just like a contractual stipulation
International awards enforceable under New York Convention
of 1958

ARBITRATION

Contractual Nature
Arbitration is a creature of contract, not of
law. It is based on the contract principle of
party autonomy or the will of the parties,
expressed as the freedom to contract.
Hence, the governing law affirmed, rather
than granted, the right to choose
arbitration.

ARBITRATION

Contractual Nature: Basis

An adult is presumed to have sufficient
discretion hence capable of making informed
decisions.
He can, therefore, make arrangements with his
counterpart to resolve their disputes in the same
manner that he and his counterpart can create
legal relations by contract.

ARBITRATION

Contractual Nature:
The process is governed more by contractual
precepts, less by law.

Age of majority

Autonomy of contracts

Limitations on the freedom to contract

ARBITRATION

Contractual Nature:
A common mistake is to look at the law first
instead of applying contractual precepts.
Doing so taking the legal approach will
most likely result to the wrong ideas.

ARBITRATION

Contractual Nature: Rule of Preference in Crafting the

Procedure
Mandatory Rules the rules from which the parties
cannot derogate; public policy safeguards
Agreement
Default Rules rules that apply in the absence or
deficiency of agreement; rules from which the parties
may derogate
Arbitrator Discretion added by arbitration law (see
MAL Art 19). Only possible if there are no mandatory
rules, no agreement, and no default rules.

ARBITRATION

Notes Re Adopting Institutional Rules

Institutions may have mandatory rules. In ICC, for

example, the rule that the award should be
reasoned and the provisions re arbitrator fees are
mandatory.
Nevertheless,
institutions
preserve
party
autonomy by also providing for default rules, e.g.
those rules with the statement unless if the
parties agree otherwise or similar wordings.

ARBITRATION

Tribunal an Instrumentality of the Parties

In arbitration the parties by contract create their
own tribunal (see Model Law provisions). They
appoint their judges; craft the procedure;
agree on several categories of choice. As
creators they own the tribunal; as owners and
creators they can shape the tribunal to what they
want it to be. As owners and creators they pay
the expenses of the tribunal that they created.
The arbitrators are akin to temporary employees
whose job description is to resolve the dispute
between the parties.

ARBITRATION

Award a Product of Private

Dispute
Resolution
Process;
Need
for
Confirmation/Recognition
A vacated award x x x was an
international award which was not
integrated in the legal system of that State
x x x (Hilmarton v OTV, 1994 BULL CIV. A,
No. 104, Court de Cassation, March 23,
1994. From Carbonneu).

ARBITRATION

Principle of Finality of Award is Contractual

x x x arbitrators are judges chosen by the
parties to decide the matters submitted to them,
finally and without appeal x x x (Burchell v
Marsh, 58 U.S.. 344, 15 L.Ed. 96 (1854).

The essence of the arbitration process is that an

arbitral award shall put the dispute to rest x x x.
Arbitral finality is a core component of the
parties agreement to submit to arbitration. Thus,
an arbitration decision is final and conclusive
because the parties have agreed that it be so x x
x. (Stasz v Schwab).

ARBITRATION

Validity
Issues:
Summary
Nature
Enforcement/Recognition Processes

of

The syllogism: The contract between the parties

is to abide by the award or decision of the
Tribunal; the subject of the petition is the award;
ergo the award must be enforced.
Cautionary Note: segregate from the merits of the
award the grounds to vacate the /refuse
recognition of the award where issues of fact
and law may arise.

ARBITRATION

Validity Issues: Following the syllogism and the need for an

enforcement
court
to
understand
the
arbitration
agreement/award, the Model Law set the following maximum
standards re accompanying papers in applying for
enforcement:
The duly authenticated original award or a duly certified
copy thereof;
The original arbitration agreement or a duly certified copy
thereof; and
If the award is not made in an official language of the
enforcement court, the applicant shall supply a duly certified
translation thereof into such language (MAL Art 35.2; see
also Convention Art 4).

ARBITRATION

WARNING: Local Requirement Re Accompanying

Papers see Rule 11.6. re attachments.
In addition to the maximum standards stated in the
Model Law/Convention, the Special Rules added the
following:
A certification against forum shopping; and
An authentic copy or authentic copies of the
appointment of an arbitral tribunal.
The additional requirements are an only in the
Philippines requirements. The first may be acceptable;
issues may be raised against the second.

ARBITRATION

Validity Issues: Award is Treated Just Like a

Contractual Stipulation
An award is ignored or vacated if bad;
recognized or confirmed and enforced if good;
subject to the principle of separability.
An added saving grace is referral back to the
Tribunal which was introduced by arbitration
laws.

ARBITRATION

Grounds To Vacate/Refuse Recognition

are mainly based on the two constituent
elements of an arbitration, namely:

Contractual

Judicial

The Constituent Elements of an

Arbitration

Judicial The arbitral tribunal decides the

dispute/s like a judge or collective judges, as
the case may be. This distinguishes
consensual arbitration from mediation and
other ADR forms.
Contractual The power of the tribunal arises
from
contract.
This
distinguishes
consensual arbitration from litigation and
statutory arbitration.
(From Carbonneu).

The Constituent Elements of an

Arbitration

From the Judicial Element flows the following:

Requirement to observe due process

Equality of the parties

Reasonable opportunity to be heard

Impartiality of arbitrators

Arbitral Ethics

The Constituent Elements of an

Arbitration

From the Contractual Element

Capacity of the Parties

Correlation: The New Civil Code provisions on
capacity to act and rules involving agency
Consent
No consent, no arbitration
Consent may be vitiated by the vices of consent

The Constituent Elements of an

Arbitration

From the Contractual Element (cont)

Form

Must be in writing.
NOTE: The law has since evolved to have
an expanded definition of in writing.

The Constituent Elements of an

Arbitration

From the Contractual Element (cont)

Jurisdiction of the Arbitral Tribunal

Contractual arbitrability, meaning that the tribunal

should not go beyond the jurisdiction granted to
it by the parties.

But note that the law may grant additional powers

to the tribunal, e.g., power to issue interim
measures of protection

The Constituent Elements of an

Arbitration

From the Contractual Element (cont)

The Rules and Procedure

Parties make their own rules and procedure.
[Note: The terms of reference is more akin to
the Rules of Court rather than a Pre-Trial Order.]

Legal Arbitrability (limitations arising from law that

affect the freedom to contract)

Principle of separability

ARBITRATION

The New York Convention of 1958

The New York Convention of 1958 is the United

Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (10 June
1958).
The Convention obliges adhered states not only
to recognize and enforce international arbitration
awards rendered in adhered states but also to
recognize written arbitration agreements.
It is one of the more successful conventions.

STATUTE BASED
ARBITRATIONS
Established by statute
Hybrid processes
Freedom of parties to select arbitrators and craft
procedure heavily curtailed
Tribunal an instrumentality of Government
Resultant award deemed integrated into the legal
system
No agreement exists that the award is final,
hence a merits review is available
Not enforceable under NY convention even if
arbitration is international
NOTE: CIAC to be used as an example.

STATUTE BASED
ARBITRATIONS

Created by statute:
There is hereby established in the
CIAP a body to be known as the
Construction
Industry
Arbitration
Commission (E.O. 1008 Section 3).

STATUTE BASED
ARBITRATIONS

Hybrid Processes
A perusal of the CIAC procedures will
show a combination of the precepts of
agreement based arbitration and litigation.
Many provisions of the Rules of Court
were imported into CIAC rules.

STATUTE BASED
ARBITRATIONS

Curtailment
arbitrators:

of

freedom

to

choose

Generally,
only
CIAC
accredited
arbitrators may be appointed in CIAC
panels.

STATUTE BASED
ARBITRATIONS

Curtailment of freedom to craft procedure:

The Arbitral Tribunal shall at all times adopt the
most expeditious procedure for the introduction
and reception of evidence, and SHALL HAVE
COMPLETE
CONTROL
OVER
THE
PROCEEDINGS, but in any case shall afford full
and equal opportunity to all parties to present
relevant evidence (CIAC Rules Sec. 13.4).

STATUTE BASED
ARBITRATIONS

Tribunal an
Government

instrumentality

of

the

Obviously, as CIAC was created by statute

in implementation of a public interest
declaration.

STATUTE BASED
ARBITRATIONS

No need for confirmation for

enforceability as resultant award is
already integrated into the legal
system.

STATUTE BASED
ARBITRATIONS
Award subject to appeal:
Rule 43 Section 1. Scope. This Rule
shall apply to appeals from awards x x x.
Among those agencies are the x x x
Construction
Industry
Arbitration
Commission.

STATUTE BASED
ARBITRATIONS

Award Even if International is Not Enforceable Under the

New York Convention

The Institution and its Rules is normally not the choice

of the parties.

Even if the parties were to voluntarily agree that CIAC

is the administering institution and the application of
CIAC Rules, still the award is not final it is
appealable.

THE ROLES OF COURT IN INTERNATIONAL

ARBITRATION

Preliminaries

Courts

Curial court the court in the seat of arbitration

Non curial court the court in a jurisdiction
other than in the seat of arbitration

Basic Rule: In matters governed by this Law, no

court shall intervene except where so provided
by this Law. (MAL Art. 5).

THE ROLES OF COURTS IN INTERNATIONAL

ARBITRATION

General
The Roles of Courts
1.
Assistive Role referral to arbitration; issuance
of and enforcement of interim measures in aid of
arbitration; enforcement of interim measures
issued by the tribunal; assistance in taking
evidence; performance of the functions of a
defaulting appointing authority
2.
Supervisory Role
3.
Enforcement Role
Note: The functions are clearly delineated by law and
should not intrude into each other.

THE ROLES OF COURT IN INTERNATIONAL

ARBITRATION
THE CURIAL COURT

In proper cases, the curial court could be:

An assistive court
A supervising court
An enforcement court

THE ROLES OF COURTS IN INTERNATIONAL

ARBITRATION
THE CURIAL COURT AS SUPERVISING COURT (MAL
ART
34)

In proper cases, the curial court in the exercise of its

supervisory jurisdiction can:

Vacate or set-aside an award rendered in the jurisdiction

where the curial court is located

Suspend the setting aside proceedings for a period

determined by it to give the arbitral tribunal an opportunity
to resume the arbitral proceedings or to take such other
action as in the arbitral tribunals opinion will eliminate the
grounds for setting aside.

THE ROLES OF COURTS IN INTERNATIONAL

ARBITRATION
THE CURIAL COURT AS A SUPERVISING COURT (MAL
Art
34)

Time Bar to Invoke the Supervisory Jurisdiction of

the Curial Court:

Not after three months have elapsed from the date the
applicant had received the award; or

Not after three months have elapsed from the date that the
arbitral tribunal had disposed of an application for
correction or interpretation of an award or the issuance of
an additional award.

THE ROLES OF COURTS IN INTERNATIONAL

ARBITRATION
THE CURIAL COURT AS AN ENFORCEMENT COURT

The curial court as an enforcement court

may, in the proper cases:
Confirm or confirm and enforce an award (MAL Art
35); or

Refuse confirmation or refuse confirmation and

enforcement of an award (MAL Art 36).

THE ROLES OF COURTS IN INTERNATIOAL ARBITRATION

THE NON-CURIAL COURT

A Non-Curial Court could be:

An assistive court

A court of enforcement

THE ROLES OF COURTS IN INTERNATIONAL

ARBITRATION
THE NON-CURIAL COURT AS ENFORCEMENT COURT

The non-curial in the proper cases may:

Recognize and enforce an award (Convention Art 3; see also
MAL Art 35); or
Refuse recognition or enforcement of an award (Convention Art
5; see also MAL Art 36).
If a petition to vacate were filed in the curial court, the non-curial
court may:
Enforce the award; or
Suspend the enforcement proceedings with or without bond
filed by the party resisting enforcement (Convention Art 6; see
also MAL Art 36.2).
Note: The standard used is the probability of success test.

THE ROLES OF COURTS IN INTERNATIONAL

ARBITRATION
THE NON-CURIAL COURT AS AN ENFORCEMENT
COURT
NOTE: The non-curial court has no power

to
vacate the award. This power is reserved to
the curial court in the exercise of its
supervisory jurisdiction.
NOTE: There is no prohibition against filing in
different jurisdictions simultaneous petitions
for enforcement, subject to the rule that the
applicant cannot recover more than what was
awarded.

THE ROLES OF COURT IN INTERNATIONAL

ARBITRATION
THE COURT AS AN ENFORCEMENT COURT

TIME BARS

Petitions to Enforce: no express provision in the

Model Law and the Convention. Opinion is to
follow contractual precepts of the seat unless if
expressly provided by law/agreement.
Raising Grounds to Resist Enforcement: the
global rule (except in the Philippines) is to wait
and wait and wait until a petition for enforcement
were filed.

THE ROLES OF COURTS IN INTERNATIONAL

ARBITRATION
THE COURT AS AN ENFORCEMENT COURT

No Second Bite at the Cherry

Some jurisdictions follow the principle that if
a party had already filed a petition to vacate
and it failed, the party will no longer be
allowed to raise the same grounds to resist
enforcement. Accordingly, only public policy
issues of the place of enforcement will be
allowed to resist enforcement.

THE ROLLS OF COURTS IN INTERNATIONAL

ARBITRATION
THE COURT AS AN ENFORCEMENT COURT
WARNING: In Special Rules Rule 12.2 (B) last sentence: Failure
to file a petition to set aside shall preclude a party from raising
grounds to resist enforcement of the award.

The quoted provision is an only in the Philippines provision.

The provision, based on the supervisory jurisdiction of a curial
court, had effectively intruded into the enforcement jurisdictions
of both the curial and non-curial courts not only under the Model
Law but also the New York Convention.

The reason for the provision is unknown. Several issues may be

raised against the provision, and it is most likely against the law
considering that the grounds to resist enforcement may involve
public policy issues.

THE ROLES OF COURTS IN INTERNATIONAL

ARBITRATION
ANOTHER CLASSIFICATION OF COURTS

1.

2.

3.

Court of Primary Jurisdiction the

supervising court.
Court of Secondary Jurisdiction the
enforcement court.
Court of Eventual Enforcement a court who
intervenes in an arbitration neither as a
supervising court nor as an enforcement
court.

WANT TO KNOW MORE?

Attend our courses and
seminars.
Contact us for schedules.
Visit us at
<www.philippinearbitrators.org
>
Philippine Institute of Arbitrators
c/o Atty. Mario E. Valderrama
Tel. No. (632) 367 4001
Telefax (632) 362 1867
E-mail: marval.law@gmail.com